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Volume 16
Issue 24
10.3390/ijerph16244937
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Article

Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets

by
Yanming Sun
1,2,3 and
Lin Zhang
4,*
1
Institute for Global Innovation and Development, East China Normal University, 3663 North Zhongshan Rd., Shanghai 200062, China
2
School of Urban and Regional Science, East China Normal University, Shanghai 200062, China
3
Institute of Eco-Chongming, East China Normal University, Shanghai 200062, China
4
School of Energy and Environment, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong
*
Author to whom correspondence should be addressed.
Int. J. Environ. Res. Public Health 2019, 16(24), 4937; https://doi.org/10.3390/ijerph16244937
Submission received: 26 September 2019 / Revised: 4 November 2019 / Accepted: 3 December 2019 / Published: 5 December 2019
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Abstract

Tradable green certificate (TGC) systems are increasingly used to promote renewable energy generation and mitigate greenhouse gas emissions. In this paper, we investigate the performance of the optimal renewables policy under full separation and full integration scenarios for two countries with TGCs. Our analysis suggests that under full separation, one country’s optimal renewable quota, which maximizes its own welfare, is strategically substitutional for the other country’s in a Cournot Nash equilibrium of the monopolistic market, when cross-border pollution exists. A country tends to become the “leader” in the market by using an information advantage to gain higher welfare. Using geometric illustrations we demonstrate the possibility that a potentially fully integrated electricity market under a TGC system can improve welfare for each country, when compensation between the countries is possible. From a policy point of view, this is significant in support of the demand for a convergence of national renewable policy schemes, where countries cooperate on solving cross-border environmental problems.
Keywords: optimal renewables policy; tradable green certificates; full separation; full integration; welfare optimal renewables policy; tradable green certificates; full separation; full integration; welfare

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MDPI and ACS Style

Sun, Y.; Zhang, L. Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets. Int. J. Environ. Res. Public Health 2019, 16, 4937. https://doi.org/10.3390/ijerph16244937

AMA Style

Sun Y, Zhang L. Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets. International Journal of Environmental Research and Public Health. 2019; 16(24):4937. https://doi.org/10.3390/ijerph16244937

Chicago/Turabian Style

Sun, Yanming, and Lin Zhang. 2019. "Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets" International Journal of Environmental Research and Public Health 16, no. 24: 4937. https://doi.org/10.3390/ijerph16244937

APA Style

Sun, Y., & Zhang, L. (2019). Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets. International Journal of Environmental Research and Public Health, 16(24), 4937. https://doi.org/10.3390/ijerph16244937

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